Bilateral reconciliation studies compare the export and import statistics of one country with the reciprocal import and export statistics of a partner country. This is possible where the statistics are compiled on bases largely consistent with the UN recommendations for the presentation of trade statistics.

If identical concepts and definitions are applied by each country to both imports and exports, and there is no timing difference between the recording of the export by one country and the import by the other, Australian exports should be identical to other countries' imports from Australia, and vice versa. However, there are many reasons why partner country statistics may not fully reconcile; where this occurs, adjustments are applied to compensate for the differences.

The aim of a bilateral reconciliation study is to identify and quantify methodological and other differences between the statistics for the partner countries. At the level of broad aggregates, this can provide a useful indication of the accuracy of the statistics. The ABS has completed bilateral reconciliation studies during the past ten years with the USA, New Zealand, Japan and the European Union (EU).

Inter-country differences

The main differences identified in these studies relate to:

the treatment of re-exports and re-imports (goods originally imported/exported in one country, which are then exported/imported either in the same condition, or after undergoing repair or minor alterations which leave them essentially unchanged, such as blending, packaging or bottling);

timing, to compensate for the time lag between a shipment departing from one country and arriving in another;

coverage, if Customs entries are not required for low value or other goods;

valuation, where this differs from the 'free on board' (f.o.b.) basis for exports, and the 'cost, insurance and freight' (c.i.f.) basis for imports; and

omissions from one country's statistics.

Other differences can relate to the exchange rates and commodity classifications used, confidentiality restrictions which can affect the availability of the data, and data errors, such as reporting and processing errors.

Results of the studies

The results of the bilateral reconciliation studies are summarised in table S7.1. The 'initial difference' shown in the table represents the gap between Australia's published exports and imports with the partner country, and the partner country's published imports and exports with Australia.

The 'residual discrepancy' is the remaining difference between the two sets of statistics after all known conceptual and methodological adjustments have been made. Possible reasons for the residual discrepancy include other valuation and timing differences, minor coverage differences, currency conversion practices, incorrect country attribution, and data errors.

(a) The Australia/ EU bilateral study was limited to an examination of Australia's exports to the EU and the EU's imports from Australia. The stability and small magnitude of the initial difference between Australia's imports from the EU and the EU's exports to Australia suggests that the data were likely to be relatively accurate.

Source:International Merchandise Trade, Australia (5422.0).

The main findings of the individual studies are set out below.

United States of America

In each year, Australia's reported exports to the USA exceeded the USA's reported imports from Australia, and the residual discrepancy, after adjustment for explainable differences, was greater than the initial difference. A negative adjustment to take account of Australia's re-exports to the USA, of goods that were originally imported from third countries and the USA, was more than offset by positive adjustments to account for: Australian origin goods imported by the USA from third countries (USA indirect imports); USA re-imports (in the USA's statistics these are included as imports from Australia, but in Australia's statistics they are classified as re-exports); and differences in timing.

Australia's imports from the USA were higher than the USA's exports to Australia, due mainly to the different treatment of low value records (Australia excludes imports valued as less than $250, while the USA excludes exports valued at less than $US2,501), and the inclusion of indirect imports in Australia's statistics. Indirect imports are Australia's imports of goods of USA origin which come from third countries, and are included in Australia's imports of good of USA origin. These goods are not generally included in the USA's exports to Australia, because the USA exported them to another country.

New Zealand

Australia's exports to New Zealand were higher than New Zealand's imports from Australia in the three years studied. The main cause of the discrepancy was the inclusion, in Australia's export statistics, of goods originally produced in third countries (re-exports), which were not included in New Zealand's imports of goods of Australian origin. Similarly, the inclusion of re-exports in New Zealand exports to Australia contributed the most significant difference in the comparison between Australia's imports and New Zealand's exports.

Japan

The main reason for the large initial difference between Australia's exports to Japan and Japan's imports from Australia was the basis of valuation. Australian exports are valued on a f.o.b. basis, while Japanese imports are valued on a c.i.f. basis. Adjustments to allow for this difference in valuation resulted in a minor residual discrepancy, indicating that the statistics between the partner countries were broadly comparable.

There were three main adjustments required to reconcile Australia's imports and Japan's exports. Japan's exports were adjusted to exclude re-exports, which were not included in Australia's imports from Japan. Adjustments were also applied for indirect imports of goods of Japanese origin in Australia's statistics, and for the treatment of low value trade.

European Union

The basis of valuation was the main cause of the discrepancy between Australia's exports to the EU and EU imports from Australia. Australia's exports are valued on a f.o.b. basis, while EU imports are valued on a c.i.f. basis. However, after adjusting for the known differences, including re-exports and re-imports, the residual discrepancies were comparatively small. As the initial difference between Australia's imports from the EU and EU exports to Australia was relatively small over the period studied, further investigation was not a priority.

Conclusion

The bilateral reconciliation studies have demonstrated that the main reasons for differences in the international merchandise trade statistics of Australia and its major trading partners were the conceptual and methodological factors underlying the compilation of the data. Actual data errors in the compilation process proved to be relatively insignificant in comparison.

The adjustments do not represent revisions to the official published statistics of either country, nor do they imply in general, errors in either country's published statistics.

The magnitude of the residual discrepancies encourages a reasonable level of confidence in the accuracy of Australia's international merchandise trade statistics (and those of the partner country), at least at the aggregate level. More detail on these bilateral reconciliation studies can be found in various issues of the quarterly publication International Merchandise Trade, Australia (5422.0) or on the ABS Internet site (by going to Themes, then International Trade).

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